Growth Hacking, Retention, Acquisition, Conversion: Growthmint

Day 8: Funnels

Funnels are made up of a series of steps with a certain percentage of people dropping off at each step down. They are widest at the top where you will be working with the most people.

Funnels provide a very helpful structure for viewing the paths your customers take in buying and using your product.

You can find funnels when you work on getting more customers as well as keeping and upgrading customers.

A common funnel for getting a customer would be:

  1. Arrive on your homepage
  2. Go to your pricing page and click sign up
  3. Enter personal information and submit it
  4. Enter payment information and submit it
  5. Acquired

Pro Tip

You want to be careful that a positive increase at the top of the funnel doesn’t lead to a negative change down the funnel that cancels out the positive one. Steps in your funnels aren’t isolated events - each one affects every step downstream.

Action

Determine the funnels most important to your product.

Funnel steps

The top is where people first enter the funnel. It always starts at 100%. A funnel step can be entering credit card information, using a feature in your app or one of many other possible interactions your customer has with your product.

In the middle steps, you’ll often see a wide range of drop-off percentages. For example, from your homepage to a “Learn More” page, you won’t see nearly as big of a drop off in conversion rates as you will from the “Learn More” page to your “Sign up” page.

Pro Tip

The funnel is a key component in figuring out where growth work will have the most leverage. Combine it with knowledge of what what a healthy conversion rate range is for each of your funnel steps and you’ll know whether optimizing a 30% conversion rate at the top of the funnel has more potential for your product than optimizing a 2% conversion rate at the bottom.

Action

Write out the steps involved in one of your most important funnels.

Conversion

When a potential customer makes it from one step in the funnel to the next, it’s called a conversion. The percentage of potential customers that make it from one step to the next is called the conversion rate.

Since it’s very rare to have 100% of your customers complete any stage in the funnel, you’ll find customers falling out of each step and a smaller number of conversions as you go down the funnel.

Most SaaS products have a customer conversion range of 2-5%. 95-99% of the people who enter the top of a SaaS app’s funnel exit by the time they reach the end.

Action

Think all the times you’ve been in a funnel and something stopped you. List out the reasons why you stopped. This is a good exercise to grasp the different reasons (many you just can’t plan for) people drop out of a funnel.

The Ideal Number of Funnel steps

The more steps you have in your funnel, the more chances that you’ll provide someone to leave. This doesn’t just include each page in your funnel, but every action that your potential customers must perform on each page.

Ideally you want a short amount of steps in your funnel. At the same time, the more you consolidate your funnel, the more the number of steps on each page grows. You need to have a balance.

Improving your conversion rates is about reducing or increasing friction. Reducing friction is likely to grow your conversion rate for the step you're directly affecting, but can result in lower quality and lower conversion rates farther down the funnel.

Pro Tip

You need to find a balance in the number of steps per page and number of pages a customer goes through. Extremes in any direction often lead to more friction.

Action

Look for areas in one of your funnels where the number of steps on a page should be adjusted - either less steps on a page or more to reduce the number of pages.